Alex Tolbert: You won't find all insurance options on new exchange

Aug. 25, 2013

Written by

Alex Tolbert

For The Tennessean

All of the publicity surrounding the opening of the new health insurance exchanges on Oct. 1 has caused some people to think that the websites for these exchanges will allow you to easily evaluate and compare all health insurance options in one place.

As it turns out, that will not be the case.

In fact, you will only be able to compare insurance options that the insurance companies have decided to put on the exchange, and these options will only be a portion of all of the insurance options out on the market.

Which options will be on the exchange? We still do not know exactly which plan options will be on Tennessee’s exchange, or exactly what they will cost.

Three things we do know:

1. New options will be available from a new insurer, Community Health Alliance.

2. Blue Cross will be offering a new network that will allow it to offer more affordable premiums to Tennesseans than it would otherwise be able to offer.

3. Health savings account-eligible policies were not excluded from being offered on the exchange, and so there should be HSA options.

Which options will not be on the exchange?

This is difficult to predict, but it’s often really helpful to look at analogous situations.

Today, the health care consumer already has access to a variety of exchanges when looking for health insurance. Let’s focus on two types of exchanges that the consumer already has access to today:

1. Insurance company exchanges run by insurance companies, such as Blue Cross, which offer plans only from that particular insurance company.

2. Private web exchanges run by companies such as eHealthInsurance.com, which offer plans from a variety of insurance companies.

In fact, private web exchanges operate similarly to how people expect the new exchanges to operate. They have tools to sort and compare different insurance options, which are meant to help the consumer make the best choice.

The main difference between the private web exchanges and the new exchanges is that one can obtain a federal subsidy only for plans purchased on the new exchange.

One of the most successful private web exchanges is eHealthInsurance.com.

When you go to visit the company’s website to seek quotes in Davidson County, a lot of plan options come up. In fact, it is easy to get the impression that all of the options available to the consumer are right there. But that is not the case.

A recent search at eHealthInsurance.com, for example, generated 16 different BlueCross BlueShield options.

However, going directly to the BlueCross website and running a search on its insurance company exchange generated 69 options.

One might think the private web exchange is helping the consumer by throwing out the 53 worst options so that the consumer doesn’t have to sift through those. Further review, however, finds that this private web exchange does not include any HSA-eligible options from BlueCross.

Health savings accounts can save consumers thousands of dollars, but people who want BlueCross won’t be able to consider those options if they rely only on the private web exchange to show them their options.

To get those options, the consumer also will have to look at BlueCross’ own insurance company exchange.

How is the consumer supposed to know which options are on which exchanges, and that it’s important to look at different exchanges?

Historically, brokers were the primary distribution channel for health insurance advice and they would help people ensure they were evaluating all the options. Government regulations, however, have led to lower broker commissions and increased certification requirements.

The result of similar government regulations for Medicare Advantage was that most traditional brokers do not offer Medicare Advantage at all, but rather offer only Medicare supplements.

New health insurance distribution channels had to develop to help seniors receive the right message about how Medicare Advantage works.

Similarly, expect new distribution channels to develop to help consumers figure out what to do about “under 65” health insurance. As they do, it’s important for the health care consumer to know that researching all the options can yield significant savings.

Alex Tolbert is the founder of Bernard Health, a company that provides advice on health, Medicare and COBRA insurance, and medical bill consulting; www.bernardhealth.com/.